Everyone in the Pool!

 A few issues have come about in the user community that need to be discussed in the broader community of the oil and gas industry. For those people who may be considering joining the user community and have questions of their own. These issues involve two areas of concern and their impact on the dynamic nature of the user community and hence the overall oil and gas industry. The user community in the Preliminary Specification is being seen as the leader in how the industry will evolve and manage change on a day to day, and long term basis. It is also seen as the leader of how the big issues such as overproduction can be resolved through solutions such as the Preliminary Specifications decentralized production models price maker strategy. The user community members are the ones that have the sole ability to make changes to the Intellectual Property making up the software specifications. They’re the ones who’ll have the hands on knowledge and experience of managing their process across the industry in their service provider organization. They’re the only people who our software developers will and can take their input from. Therefore in a dynamic and changing environment such as our user community and the software we are delivering to industry. Where specialization and the division of labor, innovation, change, automation of the business process, issue identification and resolution are part of their day to day activities. It’s not difficult to see that the scope and scale of their work might decrease over time as a result of their own efforts to ensure producers maintain their optimal profitability. 

Efficiency and effectiveness to increase the productivity of the administrative and accounting of oil and gas, to ensure the oil and gas industries short, mid and long term profitability is the objective we’re all working towards in this People, Ideas & Objects initiative. The results mentioned are somewhat counterproductive and counterintuitive to the best interests of the user community and those they employ in their service provider organizations. Which is true, so how is this resolved? I’m not suggesting the resolution here. That will be for the user community to determine themselves and in their own way. They’ll be far better equipped to understand and resolve their issues than any other individual. I am only raising the issue for discussion as I would find that a recreation of the bureaucracy in a milder form would not be acceptable. It is the purpose of a high performing community and its organizations to ensure that their overall objectives are maintained and continue to be their primary focus. 

These are classic issues that we’ve been faced with throughout the last number of generations. The speed in which society has changed has raised questions of how many jobs will be lost to computers or robots. Or worse we’ll become drones at their beck and call. We can look back in retrospect and see that the issue isn’t the quantity of jobs or quality of them. We’ve populated the earth substantially in the past few generations where poverty and hunger have declined precipitously. The quantity of jobs in the western world is abundant however it is also the increase in the quality of those jobs. These innovations have generally freed us from the menial work that need not occupy our day to day. And although today’s producer bureaucrats seek to continue to have us print out the single data element of interest and ceremonially walk it across the building so that others can key that information into their system. There is a lot of redundancy in oil and gas administration and accounting. And the issue is more prevalent today as the change dynamics being introduced by software are beginning to push the envelope of possibilities and increase the concern of how it will affect people's lives. 

There is an investment being made by those in our user community that began many years ago with their commitments to their chosen profession, their education and then the oil and gas industry. To now commit the required level to the user community is being seen as a serious mid-career change. First I’m glad that people are seeing it this way, second they are expressing the risk associated with the building of this business opportunity, particularly in the service provider operation that will be the substantial part of their future revenue of each of the user community members. There are no guarantees in life and even fewer that exist in the People, Ideas & Objects user community. I would be dishonest to suggest otherwise. If living by your wits is not part of your DNA then it will be difficult for you to prosper here. A dynamic change oriented environment doesn’t come about through the implementation of bureaucrats. 

The process of specialization and division of labor is a particularly valuable Organizational Construct that has been adopted in the Preliminary Specification. The simplicity of the theory's implementation is the means in which we achieve the dynamic nature of the user community. The simple filling of gaps is that process. As time passes society evolves in the way that it determines is best. Over time gaps between the offerings of two firms begin to be seen by entrepreneurs and are then filled through some innovative new product or service offering. (People, Ideas & Objects see a gap between the oil and gas industry and the tier 1 ERP providers such as Oracle. The inability to communicate creates this gap and it has only broadened.) Those that fill the gaps are establishing themselves a new business that they’re able to make viable as a result of the wits they’re endowed with. This is the process that we’ll be relying upon to maintain the user community and the overall objective of ensuring we provide the most profitable means of oil and gas operations. Gap filling will be part of the day to day process management of the user community member as the principles involved in their service provider organizations. Producers have to only look to the user community to interact with in terms of having their software and services provided, enhanced and issues resolved. Who is it that they talk to today to have these taken care of? As time passes anyone in the industry may see new gaps forming and filling the gap is part of the role that we are depending upon our user community members to undertake. They, and only they, have the access to the People, Ideas & Objects developers to make the changes to the software and are the principles in the service provider organizations that deliver the software and services to the industry.

The other issue that’s been raised is that no one can accurately predict what will happen. If a user community member is managing a process that is heavily influenced by government regulations then one day those regulations are repealed then their entire investment is lost. The people they employ in the service provider are potentially lost. And that capability of those individuals is no longer available to the producer firms. This could also occur purely out of the drive for efficiency. This is an investment that I would suggest can’t be left to atrophy. In an environment where Intellectual Property is a distinct competitive advantage and the overall value that is delivered to the producers. The individual hit to the user community member is of course devastating. The concern that I have is the influence this has on the risk profile and orientation of the user community members and their service providers staff. This will cause them to look at any opportunities differently and stay silent on anything that may be detrimental to them. A contrary point of view of what we are fostering of achieving the most profitable means of oil and gas operations. 

Conceptually there are 3,000 user community members needed for the development of the Preliminary Specification. One for each of the major processes under management by the application modules. These include the Oracle Cloud ERP modules or elements of both. Therefore there are approximately the same number of service providers. We are replacing the administrative and accounting of the producers and reallocating that work to the service providers. The scope and scale of these service provider operations is therefore of substantial revenue in terms of what it is designed to replace. The amount is unknown because the costs are not broken down in financial statements. The amount of overhead allowances, capitalization and other aspects of those reported costs would need to be considered. We can all however see it’s not small. How the service provider organizations are managed is upto the user community member. For example where they’re located, are they working from home etc. We see the user community members as part-time and interacting with the 600 developers needed for this initiative. Therefore approximately 20% of their time is spent with developers. People, Ideas & Objects pay a fee for the title to the Intellectual Property they develop iteratively off the Preliminary Specification and assume that fee covers all of the costs associated with the user community member to do their job. The service providers generate their revenue from the fees they’ll charge the producers for the software and services they’ll deliver. For example the fee to determine elements of the production allocation process. These fees will be charged to the Joint Operating Committees, mostly, and will be variable based on profitable production. 

The question therefore comes about who is the net benefactor of the drive for enhanced profitability of the producers and oil and gas industry? Is it in their best interests to have these communities looking to replicate the bureaucratic process of self-serving motivations that have so comprehensively destroyed the industry today? Or, should it be the user community's understanding of the larger role they take in the industry? That the destruction of real profitability by the current bureaucracy circumvents the value generated by not only producers but all those associated in the service and tertiary industries. The user community members role is to be the score keepers and to be the objective, accountable and responsible to all of the stakeholders that depend on the most profitable means of oil and gas operations. And therefore, ensure that those user community members and the investments that have been made in their service providers are kept whole during times of any transitions from regulatory or efficiency changes. Where they’re able to turn to the community at large and seek out new gaps to fill or new regulatory requirements in the software and services that are needed. The funding for these transitions may be funded by the user community members making small monthly contributions to that fund. And conversely once the service providers are established a separate and much larger fund for that purpose. Revenue insurance for lack of a better term. This however does not mitigate in any way the investment of time, energy and money that the user community member will have to make in order to establish their service provider organization. As the title of this post denotes, the water’s warm, and everyone in the pool!

This is a democratic process where the end user has the say. This is not a top down dictation of the way it must be or what the outcome will be. There are no guarantees and there are nothing but risks as we pass into this future. The framework described here is as the user community member deals with the details of the day to day aspects of the truth that they discover. They are the ones trusted to deal with the issues and opportunities they’ll find in the domain of their processes management. Intelligent people doing intelligent things. Not having to look over the shoulder for the competition who somehow are selling the same service at half the cost. An impossibility in the People, Ideas & Objects environment being created here as the licenses granted to the user community members and service providers will be for their exclusive responsibility and authority for the domain of their process. Yet competition between these service providers will never have been so strong as it finds new and innovative ways to configure their offerings in the market. Using their competitive advantages of leadership, issue identification and resolution, creativity, researching, generating ideas, designing, planning, negotiating, compromising, financing, reasoning and judgement to name just a few. If you find this too risky and unworkable. The objective of profitability everywhere and always seems unattainable. Find that these ideas are naive, altruistic and impractical. Then you’ll determine they’re not for you. And I can assure you that you’ve made the right decision. 

On the other hand we have no shortage of work to do. Much needs to be done in the next few years. The Preliminary Specification needs to be built. The engineering and geological explicit knowledge needs to be captured as Intellectual Property and developed. New oil and gas firms need to be formed, capitalized and organized. Assets need to be transferred to these new producers in innovative, strategic and tactical ways. In this process we’ll all be helping the current producers to travel faster down their chosen journey to clean energy by disposing of dirty oil. This transition to the Preliminary Specification is something that must be done to deal with the financial difficulties the industry is plagued with from the current administration. This also needs to be done as preparation for the future. And to learn from the experience of this transition as we’ll be faced repeatedly with situations that share this same scope and scale of change in the near future of this business. We’ll therefore be somewhat prepared and experienced in challenges of this nature. Please review our Production Rights to see how everyone can participate in making this new oil and gas industry happen. An industry where it will be less important who you know, but what you know and what you're capable of delivering, what the value proposition is that you’re offering?

Those interested in joining our user community are People, Ideas & Objects priority and focus. The Preliminary Specification, our user community and their service provider organizations provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations, everywhere and always. Setting the foundation for profitable North American energy independence, everywhere and always. In addition, our software organizes the Intellectual Property of the exploration and production processes owned by the engineers and geologists. Enabling them to monetize their IP for a new oil & gas industry to begin with a means to be dynamic, innovative and performance oriented. Providing a new investment opportunity for those who see a bright future in the industry. A place where their administrative, accounting, exploration and production can be handled for the 21st century. People, Ideas & Objects have joined GETTR and can be reached there. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here. 

Cloud Administration and Accounting!

 Operationally People, Ideas & Objects, our user community and their service provider organizations introduce a number of new principles of how oil and gas will increase its performance. Taking the lessons that have been and are being learned today from the new paradigm of cloud computing. We’ve expanded the general concept to include the administrative and accounting processes that are conducted within the industry. The benefits that will be achieved as a result of not only the use of cloud computing but also these principles being applied to the other non-competitive attributes of the producer firm. These will be dramatic in terms of increased financial performance that the industry experiences. This is stated when the industry's leadership has capitulated the viability and commercialization of shale to the same dustbin their management has done with the rest of the industry. 

What we see is cloud computing simply centralizes or industrializes the computing power that would otherwise be needed by the firm. Making it on demand for a small fee on the basis of how and when it’s used. Moving it from a fixed capital and operating cost to a variable operating cost. The need to build the physical infrastructure and maintain it in house is a costly undertaking with the need to build the capacity and capability that will satisfy the peak demand in a reasonable period of time. The maintenance can become a significant part of the cost when the software stack becomes ever more capable and the features demanded by users more complex. The need to have these resources in house, or to go without the feature, becomes less and less of a viable or financial choice. Whereas the cloud computing providers can disperse what are to them incremental costs across their vast user community. Therefore the cost of computing from a capital point of view disappears. And the resource becomes an affordable variable cost. The features become enhanced and far more capable due to the ability to distribute the costs across the higher population of users. If you’ve never used a cloud computing service on a personal basis I would highly recommend it. Google has its Google Cloud Platform which from a general user perspective is the far superior service in my opinion. However Oracle's Cloud Infrastructure is the industrial choice to use. Note it will also be the cloud computing offering that will be used by our user community and their service providers in the People, Ideas & Objects Preliminary Specification system. 

It is this feature of cloud computing that needs to be applied to the larger areas of administrative and accounting in oil and gas. There would be no reason that these same principles could not be applied here to solve many of the issues being experienced in the industry. Taking the administrative and accounting costs of the capacities and capabilities that are demanded of the producers to function in the North American public markets. It is these overhead costs that are consuming producers profitability. Each producer replicating the exact same uncompetitive capability and capacity in an unshared and unshareable configuration is costly and inefficient. We believe this to be the secondary reason behind chronic overproduction that profitability is such an issue. If there is an organizational principle of decentralization that is exploitable by the use of the Internet, making industry overhead variable is most certainly the beginning. 

These are what we’ve adopted in the configuration of the Preliminary Specification. It is how we’ve configured the user community and their service provider organizations to function in providing the administrative and accounting capabilities and capacities to the North American producers. It is all of the above and it’s more. It is this configuration that enabled these costs to change their characteristics from being fixed, producer based capabilities and capacities to a variable cost, industry based capacities and capabilities. Where if the accounting of the property in the Preliminary Specification showed that the actual, factual performance of the property was a loss it could be shut-in. When it was shut-in it would be producing no data that would generate any subsequent activity in the service providers, no work would be conducted by them, for example no costs for the recording of revenue, and therefore the property would incur a null operation, no profit but also no loss. Enabling the industry to remove the marginal production from the market. When the pricing of the commodities are subject to the economic principles of price makers then producers will only produce when profits are achieved. Producers will only increase production when it can be done so profitably. And this chronic overproduction across North America will stop, as will the need to always participate on the treadmill in order to pay the fixed overhead costs. A producer capable of producing 100,000 boe / day would be able to produce at any level of their production profile, based on the market price, and remain profitable at all times. Whether that was 100, 95, 80 or even 50 thousand boe / day it wouldn’t matter when all of their costs have become variable cloud based capabilities and capacities.

These are just simple, modern day examples of the expansion of specialization and the division of labor that are available to us as a result of the development of the Internet. They hold untold riches for society when we understand all the value that has been generated by them since 1776 when Adam Smith wrote his book “The Wealth of Nations.” There has been no other source of value generated other than from specialization and the division of labor. Application of it in the form of cloud computing is being experienced and realized today and that is leading to its strong(er) uptake. Expansion of the same concepts within industries is to be realized in other areas and that is an organizing principle that we’ve adopted in the Preliminary Specification. These are detailed in the Organizational Constructs section where we’ve identified the five main organizing forces being employed include Information Technology, Intellectual Property, Markets, Specialization and the Division of Labor and of course the Joint Operating Committee to define and support what is conducted in oil and gas. 

There are a number of inherent virtues of configuring the accounting of the industry in this manner. With the service providers conducting the transactions of the producers. There is an objectivity used in how they apply their process to the data they process. In many cases they’ll know very little about the data other than what is necessary for them to effectively conduct the process they’re responsible for. Therefore every producer will be receiving the same standardized accounting process management and transaction processing that any other producer will obtain. This is critical when the onus is on the individual producer to shut-in the production of unprofitable production. The accuracy and timeliness of that accounting information which is the base of that determination of unprofitability is going to need to be objective and producers will need assurance that all other producers were subject to the same criteria in determining their profitability. With these methods described in the Preliminary Specification this assurance will be provided. If Exxon were to be calculating their profitability on an unknown and different basis would other producers be willing to accept that their property was unprofitable? At the same time if Exxon was the source of the accounting system used in industry would anyone doubt the objectivity of that? This independence of the service providers, standardization of accounting and objective nature of the work being done brings a new level of integrity and reliability into the outcome of the efforts of the industry. There will be a standard of objective performance that is applied to all production irrespective of the producer or its influence outside of the business. When the integrity of the accounting of oil and gas is such that the investors have abandoned the industry for the past six years and demanded tier 1 ERP systems. I see this as a mandatory requirement. 

Typical of any industry in a crisis the ability for new and innovative firms to enter and prosper ceases to occur. The effect of the inability of the start-up to junior oil and gas firms to prosper in the past several decades has finally become a reality where their existence is challenged and seemingly terminal. There are to my knowledge no new companies being formed and the consolidation of the larger producers is a symptom of the same decaying carcass. For a dynamic, innovative, accountable and profitable oil and gas industry there needs to be a diversity of firms participating. With a broad and robust level of new and innovative firms leading the way. The question therefore is how do you implement a system that introduces the complexity and comprehensive difficulty of Oracle ERP Cloud with the Preliminary Specification into the startup and junior oil and gas firm in order for them to compete for capital in today’s North American capital markets? The lack of success of the small and junior oil and gas producer has been attributable, in my opinion, due to the demand for them to achieve the financial momentum that will include the costs of the executive, accounting and administrative overhead that is demanded as a minimum requirement of a producer listed on the regulated public markets. Let’s put this requirement at $3.5 million which is a standard that demands more than just the engineering and geological skills of a producer. 

With People, Ideas & Objects Preliminary Specification, our user community and their service providers, producers large and small gain the ability to be able to access these systems to conduct their business on a standard, objective service that is a variable cost. A startup and junior producer doesn’t need all of the features when they start and can build their firm on the basis of what is used when it is used on a variable cost basis. The benefit of having the service provider delivering their service and the software ensures they’ll have the capacity and capabilities available when required, but also they’ll have the state of the art administrative and accounting providers who are trained in these by their daily use across the industry. Initially access to the Preliminary Specification may be as little as what is needed to prepare their financial statements. This short paragraph does little to establish how the Preliminary Specification, our user community and their service providers are able to provide these services to the startup and junior producers and it is more comprehensively documented in the Organizational Construct section located here. When you sign on to a cloud computing provider you’re signing on to the most complex and comprehensive systems ever conceived. You may not appreciate that when you reduced your accounting close in half and received the shockingly affordable invoice. 

I’ve discovered another mistake that I’ve been making throughout these past years. I’ve been referring to the Preliminary Specifications publication and completion as being December 2013. In retrospect I don’t know why. Reviewing this blog I see now that it was actually August 2012 that it was completed and published. What occurred throughout 2013 was a discussion of the impact and consequences of implementation of the Preliminary Specification in oil and gas.

On the other hand we have no shortage of work to do. Much needs to be done in the next few years. The Preliminary Specification needs to be built. The engineering and geological explicit knowledge needs to be captured as Intellectual Property and developed. New oil and gas firms need to be formed, capitalized and organized. Assets need to be transferred to these new producers in innovative, strategic and tactical ways. In this process we’ll all be helping the current producers to travel faster down their chosen journey to clean energy by disposing of dirty oil. This transition to the Preliminary Specification is something that must be done to deal with the financial difficulties the industry is plagued with from the current administration. This also needs to be done as preparation for the future. And to learn from the experience of this transition as we’ll be faced repeatedly with situations that share this same scope and scale of change in the near future of this business. We’ll therefore be somewhat prepared and experienced in challenges of this nature. Please review our Production Rights to see how everyone can participate in making this new oil and gas industry happen. An industry where it will be less important who you know, but what you know and what you're capable of delivering, what the value proposition is that you’re offering?

Those interested in joining our user community are People, Ideas & Objects priority and focus. The Preliminary Specification, our user community and their service provider organizations provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations, everywhere and always. Setting the foundation for profitable North American energy independence, everywhere and always. In addition, our software organizes the Intellectual Property of the exploration and production processes owned by the engineers and geologists. Enabling them to monetize their IP for a new oil & gas industry to begin with a means to be dynamic, innovative and performance oriented. Providing a new investment opportunity for those who see a bright future in the industry. A place where their administrative, accounting, exploration and production can be handled for the 21st century. People, Ideas & Objects have joined GETTR and can be reached there. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here. 

These Are Not the Earnings We're Looking For, Part LXXIII

 The perspective in which People, Ideas & Objects see the performance of the North American oil and gas producers stands in stark contrast to the culture that drives the industry. We believe that a capital intensive industry would have large elements of capital costs included in the cost of the commodities passed to the consumers. That profitability is necessary everywhere and always for a prosperous and healthy oil and gas, service and associated industries. The industry culture has developed over the past four decades to the level where it’s best represented by the claims of “building balance sheets” and “putting cash in the ground.” Where cash flow is deemed to be adequate as a performance measure, and that profitability doesn’t necessarily represent where the value is generated. Industry culture believes the value is represented in the reserves that are released as a result of the exploration and production conducted to expose them to the market. People, Ideas & Objects believe that reserves are useless and valueless if they can’t be produced profitably. The reserves present value today is negative as they demand cash in order to be produced. The industry is therefore worthless. A conclusion that industry leadership has also reached after decades of feigned self deception and aggressive, specious accounting. A leadership that has now capitulated on oil and gas’ viability to saunter over to clean energy and give it a try. Funded by oil and gas revenues that belong to shareholders who the leadership never hesitated or felt any remorse betraying before. 

Our sample of producers' third quarter financial statements show that culture is persistent and unchangeable. Left to itself it will continue with its status quo operation. This is affectionately known as “muddle through” in oil and gas. For People, Ideas & Objects Preliminary Specification to instil a culture of profitability everywhere and always within existing producers is an impossibility as the force of the existing culture would eventually consume everyone. It’s not going to happen and will not happen, we’ve known that from the beginning, and so have those that have prospered from the culture they’ve cultivated. Ours is a rebuilding of the industry brick by brick and stick by stick in the vision of the Preliminary Specification. A renewed method of how the industry interacts within itself and how its processes are conducted. Both in terms of the ERP software, administrative and accounting services. If you change the process you change the outcome. What is the status of the producers as they stand today? No one would deny that the oil and gas future has never been in such great demand. Society's ability to mechanically leverage a barrel of oil to at least 10,000 man hours of labor is the reason we’re able to live the luxuries that we do. At the same time the challenges to industry have never been greater. There are incremental issues that are far more complex than what has been faced before. And we have the alleged leadership of the North American producers sauntering off the stage in an active capitulation of responsibility to avoid the accountability they know they’ve used and abused. 

All of this speaks to the scope and scale of the damage that has been experienced and realized by these producers. The continuation of poor performance and deterioration of basic financial health of producer firms continues to decline as reported in their third quarter financial statements of 2021. There is no acceptable reason on earth why oil and gas should continue to operate under the fallacy of the “boom/bust” cycle. It is wholly attributable to bureaucratic laziness and sloth. The thought that oil and gas commodities are subject to price taker characteristics and “markets” somehow magically take all the production that producers could produce was the myth and general thinking. Markets do one and only one thing, pass information about that market in the form of its price. If that price is adequate to make a profit, then produce. The method used in the Preliminary Specification. This blog first raised the point that oil and gas commodities are subject to price maker characteristics in a post entitled “Times Like These Calls For…” on November 11, 2008. Thirteen years ago and industry bureaucrats have done nothing about it. Information that could have been used to generate the trillions of dollars of needed and necessary value to maintain a healthy, viable, prosperous and above all profitable oil and gas, service and associated industries. What’s your definition of sloth, or are these just opportunity costs as bureaucrats assert? Maybe I should bite my tongue but in the face of such unnecessary destruction within the industry I find it increasingly difficult to do so. Now, as we step into the broader societal damages these bureaucrats will never accept and hold themselves responsible or accountable for what prudent management or even just the ability to read a blog would have ensured was avoided.

I still don’t see the majority of these producers surviving these financial damages. The scope and scale of the wrought they’ve authored is well entrenched within the producers financial statements. What I see is the disproportionate size of their assets valuation as a result of “building balance sheets.” These assets have become disproportionate in terms of the overall size of the revenues they're generating. Accepting that these long term assets are bloated, conversely short term assets are abysmal. The level of debt being carried by most of the producers is unacceptably high. To clarify, that’s too much debt on asset valuations that are bloated disproportionately. Which is something that their banks appear to agree with. We believe the bloated asset balances more accurately represent the amounts that investors have subsidized consumption. Instead of passing these costs on, they were collected on the “well built, bigger, beautiful, balance sheet” so the CEO could strut down mainstreet and gloat about their spending. Where are the strategies? Where are the plans? Caught flat footed, again, just as they were in 2015 when their investors began their exit. Bureaucrats can conveniently ignore these issues as they replace them with larger, more urgent and critical ones. 

This is the frustrating aspect of all of this for me. Accepting that oil and gas commodities are price makers. Ensuring that the capital costs associated with exploration and production were passed on to consumers in a timely and accurate manner. These being the two basic principles of accounting. Producing only profitably as described above. This is the method that we’ve defined for the oil and gas producers within the Preliminary Specification. (Please recall it was published in its entirety in December 2013.) This would have ensured that the “cash they were putting in the ground” was being returned to them in a timely manner. Giving them the means in which to operate their organizations as businesses and pay down debt, fund their capital expenditures and dividend the appropriate earnings to their shareholders. It was just so much easier to continue duping investors. Where are their strategies today? Where are the plans? Caught flat footed, again, just as they were in 2015 when their investors began their exit. Bureaucrats can conveniently ignore these issues as they replace them with larger, more urgent and critical ones. 

Existential issues, enhanced complexity, cultural impedance and leadership abdication. Yet all I see for oil and gas is the most spectacular opportunity to produce profitably everywhere and always, and in the real sense of the word, to achieve energy independence on the North American continent and ensure that we remain the most powerful economy for the remainder of the century. Instead these facts were used as proof as far as the bureaucrats were concerned, that I’m crazy, that the Preliminary Specification wasn’t viable and they otherwise had this in hand. The only question I have is do these bureaucrats have the gumption to ask for another chance?

On the other hand we have no shortage of work to do. Much needs to be done in the next few years. The Preliminary Specification needs to be built. The engineering and geological explicit knowledge needs to be captured as Intellectual Property and developed. New oil and gas firms need to be formed, capitalized and organized. Assets need to be transferred to these new producers in innovative, strategic and tactical ways. In this process we’ll all be helping the current producers to travel faster down their chosen journey to clean energy by disposing of dirty oil. This transition to the Preliminary Specification is something that must be done to deal with the financial difficulties the industry is plagued with from the current administration. This also needs to be done as preparation for the future. And to learn from the experience of this transition as we’ll be faced repeatedly with situations that share this same scope and scale of change in the near future of this business. We’ll therefore be somewhat prepared and experienced in challenges of this nature. Please review our Production Rights to see how everyone can participate in making this new oil and gas industry happen. An industry where it will be less important who you know, but what you know and what you're capable of delivering, what the value proposition is that you’re offering?

Those interested in joining our user community are People, Ideas & Objects priority and focus. The Preliminary Specification, our user community and their service provider organizations provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations, everywhere and always. Setting the foundation for profitable North American energy independence, everywhere and always. In addition, our software organizes the Intellectual Property of the exploration and production processes owned by the engineers and geologists. Enabling them to monetize their IP for a new oil & gas industry to begin with a means to be dynamic, innovative and performance oriented. Providing a new investment opportunity for those who see a bright future in the industry. A place where their administrative, accounting, exploration and production can be handled for the 21st century. People, Ideas & Objects have joined GETTR and can be reached there. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here. 

These Are Not the Earnings We're Looking For, Part LXXII

 Elections for the U.S. House and Senate will be held in early November 2022. The premier issue will be the price of gasoline in the United States. OPEC+ seems to have learned the detrimental lessons behind the overproduction of commodities that follow the principles of price makers. They continue to supply the market with reasonable increases each month. A more moderate approach than what has been done before. North American producers may have learned the same lesson, although the financial devastation they’ve caused their producer firms, the “hilarious” comments from the Biden regime, or clean energy being bureaucrats true calling. The lack of response to the higher commodity prices is difficult to discern why their response is as muted as it is. There is one other possibility, the lack of capacities and capabilities in the service industry. And although producer bureaucrats did so much of the hard work and effort that was needed to turn the business around and to report their specious profits in the third quarter of 2021. The same kind of profits they’ve been reporting since as early as 1983. They seem to know and understand that they’ve authored their own demise to coincide with these escalating commodity prices, the democratic party vaporizing and gasoline prices revealing the fallacies of the green agenda. It’s a different quarter but with a new twist, hedges. Those current, non-cash items that don’t appear in their “non-gaap” earnings quoted in the markets. 

It could be argued that I see the financial situation in oil and gas a bit differently than most. My bias arises as a result of opinions formed decades ago and the fact that I’ve banked everything I have on what I believed to be an existential issue that would eventually destroy the North American producers and everything, that is everything associated with it. As of a few years ago I believed we reached the point where the financial damage was so detrimental that nothing, that is absolutely nothing, could return North American producers under their current administration to prosperity, ever, and I mean for all time. 

It is through the review of our sample of producers' third quarter financial reports that I see a trend where accounts payable are ballooning by 10.46% just from the third quarter of 2021. Which I realize now is its own 20.84% increase in accounts payable for just the second quarter! A 33% increase in 6 months. Why? We saw this a few years ago when producers sought to continue their capital programs by using the good will of the service industry. Paying for their capital expenditures programs on an extended 18 month payment cycle. Capital programs producers were unable to finance in any of the more “traditional” ways. Due to their financial current position and the volume of capital expenditures that are now being undertaken we know that’s not happening again. So what is causing this bloating of accounts payable? I believe it is the inter industry trade payables and receivables associated with the joint interest billing between producers. Accounts receivable in the third quarter of 2021 is up 6.56% in the third quarter. The second quarter was also up by 14%. One would not rise without the other if it wasn’t the joint interest billings. Operators who are in some cases incurring the operating costs on behalf of the joint account are also leveraging their gas and oil contracts for all of their working interest partners' production in the property. The more production they control on behalf of their partners the better terms they can negotiate with buyers. Therefore the joint interest billings represent the net operational proceeds of the production for the property. These payments are made monthly to their partners based on the prior production months accruals. People, Ideas & Objects suspicion is that these are the reasons why these a/c payables accounts are ballooning, and why the associated accounts receivable are doing the same, somewhat in concert. In terms of materiality, accounts payable have now ballooned beyond the amounts during the abuse producers exercised against the service industry. The question therefore is why would producers, if our suspicions were true, be holding the net proceeds of their partners? The counter argument of the consolidation of producers may not hold when it is realized that production of our sample is up 0.21% in the third, and 9.45% in the second quarter.

I have argued against the use of hedging before. With People, Ideas & Objects there would be no need to have such derivatives contracts when all production is produced profitably everywhere and always. The implied guarantee of the Preliminary Specification. I see that hedging is used by bureaucrats to instill the level of mediocrity that they seek. If the producers see that the outcome of the firm is predetermined to be x profit based on a hedged price of $60. Why would they seek to outperform or enhance the producer's performance? They wouldn’t because they knew they couldn’t. The only thing they risked was making mistakes that ended up costing them and they’d be responsible. The mindset that has spawned the “muddle through” strategy. When it was learned many decades ago that specious accounting enabled profits to be whatever “management” determined them to be, they knew they could call upon any performance criteria they needed to satisfy the demands upon them. Hence the industry's cultural degradation commenced. This led to the first overproduction related oil collapse in 1986.  

Many of today’s futures contracts were entered into by the producers just after April 2020 when the price of oil dipped to negative $40.00. Spooked and looking for some solid ground the majority of the contracts are substantially below the current commodity prices. Placing the producers on the hook for paying a reasonably high differential in comparison to the current price of $82.50 for oil and $5.50 for natural gas to the hedged price. The value of these losses, both realized and unrealized, for our sample of producers in the third quarter increased from the second quarter's loss of $8.964 billion to $16.879 billion. Almost a doubling of the losses with the majority, about 80% being unrealized. Recall our sample of producers represent a diversity of the North American based producers that are responsible for 11.007 mmboe / day. Many of these contracts extend for many years, however continue almost unanimously through 2022. Causing an enhanced demand for cash, during a time when investors and bankers are not interested in helping out. Seeking financial assistance to cover the differential on these contracts is not going to draw either of those parties back to the table. The reason this is such a material issue is to the larger point of not being able to and having no capacity to increase production to meet resurgent demand. At the same time OPEC+ are slowly returning their production to market. Causing further upward pressure on prices throughout the next few years, and hence larger losses on these contracts.

As we’ll see when producers turn to cannibalizing their working interest partners we can only think it’s time. I could always be mistaken about my suspicions. However, I would put my record of accuracy in identifying issues and providing solutions such as the Preliminary Specification against the bureaucrats' lack of caring about the business and self aggrandizement over these past 30 years. Their renewed vision of clean energy and capitulation of North American oil and gas’ viability, including shale. These latter points are almost secondary or minor points in my argument. 

Please note that Conoco is a member of our producer sample. They do not hold any of these contracts. Have therefore not incurred any of these losses and their working capital represents 109% of our samples total. Their cash is approximately $10 billion and are by far the healthiest position of all the producers we sample. Interestingly their accounts payable and receivable accounts also escalated in concert with the other producers. (13.45% in the second, and 28.21 in the third quarter. Concho’s acquisition was completed on January 15, 2021 causing Conoco’s a/c payable to increase 33.88% during the first quarter.) Showing this is an industry related, possibly trade payable / receivable issue associated with their joint accounts. I doubt Conoco would want to be the only one paying their bills in the industry. For three quarters our sample of producers had revenues of $195 billion and accounts payable were $76 billion. Representing 3.5 months of the producer's annual production or 255% of 2021 capital expenditures incurred to date. At a time when some commodity prices are healthier than they’ve been for a decade. Payables and receivables are ballooning uncontrollably, cash and working capital outside of Conoco are in decline. Cash and working capital deterioration have been a constant and systemic issue we’ve been arguing here at People, Ideas & Objects. If you don’t have “real” profitability you’re not building value and investors were used until 2015 to backfill the bureaucrats' personal take. I believe this current action is the bureaucrats reading the writing on the wall and attempting to shore up some cash by feeding off their own partners. No more excuses, no more blaming and no more viable scapegoats. It's a simple matter of eat, or be eaten. 

On the other hand we have no shortage of work to do. Much needs to be done in the next few years. The Preliminary Specification needs to be built. The engineering and geological explicit knowledge needs to be captured as Intellectual Property and developed. New oil and gas firms need to be formed, capitalized and organized. Assets need to be transferred to these new producers in innovative, strategic and tactical ways. In this process we’ll all be helping the current producers to travel faster down their chosen journey to clean energy by disposing of dirty oil. This transition to the Preliminary Specification is something that must be done to deal with the financial difficulties the industry is plagued with from the current administration. This also needs to be done as preparation for the future. And to learn from the experience of this transition as we’ll be faced repeatedly with situations that share this same scope and scale of change in the near future of this business. We’ll therefore be somewhat prepared and experienced in challenges of this nature. Please review our Production Rights to see how everyone can participate in making this new oil and gas industry happen. An industry where it will be less important who you know, but what you know and what you're capable of delivering, what the value proposition is that you’re offering?

Those interested in joining our user community are People, Ideas & Objects priority and focus. The Preliminary Specification, our user community and their service provider organizations provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations, everywhere and always. Setting the foundation for profitable North American energy independence, everywhere and always. In addition, our software organizes the Intellectual Property of the exploration and production processes owned by the engineers and geologists. Enabling them to monetize their IP for a new oil & gas industry to begin with a means to be dynamic, innovative and performance oriented. Providing a new investment opportunity for those who see a bright future in the industry. A place where their administrative, accounting, exploration and production can be handled for the 21st century. People, Ideas & Objects have joined GETTR and can be reached there. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here. 

The Neighbors Dog Ate Today's Post

 The dog somehow got in and shredded it. Was one of the best written, top 10 for sure, maybe even top 5. I'll have to recreate it and post it on Monday. Second post for the week will be on Tuesday and then will be taking the rest of the week off. 

These Are Not the Earnings We're Looking For, Part LXXI

 Producers are having their bluff called in their third quarter reports of 2021. None other than Royal Dutch Shell came under criticism from Third Point hedge fund manager Dan Loeb who has taken a position of $500 million to a $1billion in the company. What producer bureaucrats have done to themselves is quite evident in a series of articles on the subject. To start things off Mr. Loeb sent an Investor Letter that stated.

Shell has too many competing stakeholders pushing it in too many different directions, resulting in an incoherent and conflicting set of strategies attempting to appease multiple interests but satisfying none.

At this point no concrete actions are recommended by Mr. Loeb, such as new directors or proxy action. He did suggest that as many as four divisions, or separately traded entities should be the result of the breakup of Shell. I see this more as an invitation for other investors to join him. The title of the CNBC article is “Shell vs. Dan Loeb: It’s Open Season for Investors on Big Oil’s Future,” spelling out a rather interesting next few months. 

People, Ideas & Objects have been arguing that producer moves into clean energy investments are unauthorized and wholly unacceptable. If investors believed in clean energy they’d sell their oil and gas producers and buy into the clean energy industry. They don’t need bureaucrats to make those decisions for them. Nor do they ever desire to have bureaucrats make changes in the focus of the organization, whether that is a change into clean energy or to compete with WalMart. I’m still waiting for the fire proof set top boxes for Enron’s broadband Internet service. Taking revenues from oil and gas to fund other businesses is inappropriate, should never be done and certainly never without the express authorization of shareholders. Of the North American based producers, I’ve seen none of them authorized in such ways. The facade of a board of directors vote in last year's Exxon annual meeting I feel was a contrived effort to show the world that Exxon was moving into the clean energy direction at the behest of its shareholders. Again if shareholders want to invest in clean energy there’s nothing stopping them. Reflected in the CNBC article Shell’s bureaucratic attitude is on display. 

“A very significant part of this energy transition is going to be funded by the legacy businesses that we still have,” Shell CEO Ben van Beurden said on the call with reporters from multiple publications on Thursday. “If you want to exclude us from it, I don’t think it will go as fast as it would otherwise go.” Being able to replicate its strategy would be more difficult across multiple companies, he said, but the argument that the balance sheet of the legacy firm is critical to energy transition remains harder to prove in the short-term when the majority of its cash management goes back to shareholders as in the Permian deal.

The Permian deal was Shell selling all of its Permian assets to Conoco for $9 billion. $7 billion of which was a dividend and $2 billion was believed to be committed to clean energy. Later in the same article it shows the pickle that bureaucrats have put themselves in. Why People, Ideas & Objects are against the diversion of oil and gas revenues. And why it's no longer acceptable that corporations make these types of decisions on behalf of their shareholders, since at least the 1980s. 

The traditional ethos of the oil and gas investor is to hold the stock with the expectation that you will suffer through bad years in the cycle when oil prices are low but when things go back up you will be rewarded and compensated for the additional volatility risk. And because of that, “it’s hard to say we won’t be able to compensate you now, you have to be patient,” Dalman added.

Shell is the first producer to be faced with the fact that any diversion of revenues from oil and gas into clean energy is never going to fly. This Forbes article, which is as consequentially titled as the CNBC article, “One Foot on the Dock, Why Breaking Up Shell May be Just the Beginning” goes into great detail as to why Loeb’s Third Point hedge fund is acting in its best interest in suggesting the breakup of Shell. Forbes analysis is based on the history of many other such attempts in other industries and their failed outcomes. Although it does not mention Enron’s broadband investment.

Recently in congressional hearings Shell’s North American President Gretchen Watkins did her best deer in the headlights routine when a congresswoman presented her with a mason jar full of M&M’s to demonstrate Shell’s capital expenditures in clean energy vs oil and gas. Not taking the opportunity to fully explain her point about reliable energy investments, and the mortal dependence the congresswoman's constituents had on the reliability of oil and gas. This is the failure of all the producer bureaucrats and they’re therefore the product of their own undoing. As Dan Loeb indicated, their conflicting objectives make them mute and unable to utter a coherent statement. Particularly in the face of such ridiculous presentations involving M&M’s. Their past promises to oil and gas investors who built these companies with the other “stakeholders” Loeb is discussing, are not fulfilled when the fruits of their efforts are used surreptitiously by unaccountable bureaucrats. But the ultimate conflict comes about by the fact that this entire contrived clean energy initiatives were alleged to have been at the behest of their shareholders. So now they’ll either have to ignore these same shareholders who bureaucrats claimed told them to focus on clean energy? Or tell the world their shareholders are now lying and their story has changed by wanting to break up the company. 

Notably Loeb stated the oil and gas part of Shell was being valued at close to nothing. When the CEO’s hide from their job of selling what it is they’re doing, pretending to be in other businesses, why would anyone place any value on that. Bureaucrats should welcome the changes that Loeb is initiating. It provides them with their much sought after and welcome home in clean energy. A clean divorce from dirty oil. A place where they’ll be able to live in peace and harmony with the environment and save the planet. Able to continue with their well entrenched “muddle through” and “do nothing” strategy and operating procedure in their chosen clean energy business. Well not so fast, they’re now stuck in startup organizations with no revenues and little prospects of profitability or ability to generate value. Let’s wish them luck nonetheless.

This is their ultimate conflict and contradiction. Shareholders have been demanding producers build value for them where their dividends and yields are competitive in the North American capital markets. In addition, shareholders have demanded producers begin using tier 1 ERP providers, of which the Preliminary Specification uses Oracle Cloud ERP as the base of our solution. Investors are aware of the nature of the accounting related problems in the industry. Investors are fully aware of the nature of how they were treated pre 2015. Investors know that producers can’t, won’t and will not ever approach the oil and gas business constructively. Bureaucrats don’t know how to make money and the damning consequence of the long term effect of this is their culture has no understanding of why, how or what to do to make a profit. They don’t have the necessary ERP systems available to tell them to determine what’s profitable and what’s being produced at a loss. The devastation they’ve orchestrated throughout the primary, secondary and tertiary industries affiliated with oil and gas are all severely damaged. For the past four decades the only prosperous area of the industry is the innovative executive compensation that has been paid to those who never had anyone but their own interests in mind. Those who had the responsibility and authority to profitably build the industry, and those who chose to silence and eliminate anyone that raised any issues.

Will investors be successful in their desire to break up these firms between clean energy and oil & gas? The ultimate message investors can send to management is to cut off a firm's funding. Oil and gas investors began doing this in 2015. Six years of “muddle through” later we see nothing has been done to acknowledge or address the specific issues and deal with the concerns their investors raised. The only thing leadership did was declare their favored shale investment and all of oil and gas to be untenable, prompting their move to clean energy. Diverting revenues to unauthorized and unrelated businesses where they have no competitive advantages, capacities or capabilities. Industries that have been proven to be financial sinkholes. Therefore I think it’s clear what will happen. Bureaucrats will be sent packing to their preferred destination. When the alleged leadership has other ideas and a direction that is counter to the business they’re in, don't listen or act, what choices are there? None. The entire oil and gas industry in North America and its secondary and tertiary industries have been devastated and cannibalized by the lack of profitability being generated in the producer firms. Bureaucrats may think they deserve another chance, I think that opportunity passed them by many decades ago. Back when they were passing their management off as value generating, when they culturally slipped into the abyss of not knowing what profits are, where they were being made or lost or how exactly to earn them within their organizations. Instituting a culture unwilling to change for any purpose and never at the behest of their investors. Their investors they’ve refused to respect or even acknowledge their existence. All in order to ensure the bureaucrats franchise of self aggrandizement remained intact. But then I’m biased. The one thing I hope to see more than anything is the officers and directors asking for a seat at the table. And as I was told by them when I initially proposed the use of the Joint Operating Committee in August 2003, they may find they’re “persona non grata.”

On the other hand we have no shortage of work to do. Much needs to be done in the next few years. The Preliminary Specification needs to be built. The engineering and geological explicit knowledge needs to be captured as Intellectual Property and developed. New oil and gas firms need to be formed, capitalized and organized. Assets need to be transferred to these new producers in innovative, strategic and tactical ways. In this process we’ll all be helping the current producers to travel faster down their chosen journey to clean energy by disposing of dirty oil. This transition to the Preliminary Specification is something that must be done to deal with the financial difficulties the industry is plagued with from the current administration. This also needs to be done as preparation for the future. And to learn from the experience of this transition as we’ll be faced repeatedly with situations that share this same scope and scale of change in the near future of this business. We’ll therefore be somewhat prepared and experienced in challenges of this nature. Please review our Production Rights to see how everyone can participate in making this new oil and gas industry happen. An industry where it will be less important who you know, but what you know and what you're capable of delivering, what the value proposition is that you’re offering?

Those interested in joining our user community are People, Ideas & Objects priority and focus. The Preliminary Specification, our user community and their service provider organizations provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations, everywhere and always. Setting the foundation for profitable North American energy independence, everywhere and always. In addition, our software organizes the Intellectual Property of the exploration and production processes owned by the engineers and geologists. Enabling them to monetize their IP for a new oil & gas industry to begin with a means to be dynamic, innovative and performance oriented. Providing a new investment opportunity for those who see a bright future in the industry. A place where their administrative, accounting, exploration and production can be handled for the 21st century. People, Ideas & Objects have joined GETTR and can be reached there. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here. 

User Community Clarification

 Last Thursday I detailed a summary of a broader vision of the North American oil and gas industry with the Preliminary Specification. Within that I described an extension of the Intellectual Property development of engineering and geological understanding and knowledge of oil and gas. That description was fundamentally different to what has been developed in terms of the administrative and accounting IP of oil and gas in North America. There are reasons for that and as I mentioned on Thursday, today’s post will clarify the difference between the two and why those differences exist. The way that I see the understanding and knowledge of exploration and development in oil and gas Intellectual Property is that it is the wild west. Producers, in order to compromise all the known and valuable IP that existed in the industry, could not have any of that IP documented. It would be counterproductive to their overall strategy of using whatever they liked, where and when they liked without concern for the time, money and effort taken to develop the underlying IP. With the rebuilding of the industry under the Preliminary Specification we’ve thrown the cat’s amongst the pigeons and started the free for all, wild west situation where it’s up to anyone who can document what is known and knowable to build their organization around that foundation of geological and engineering of oil and gas IP. Whether that is as a producer in the new industry we’re building for themselves or as a consulting firm delivering their tacit knowledge as a service in combination with the explicit knowledge they’ve captured in the IP. The key difference in comparison to the user community is that this work will be earned by the engineer or geologist upon its publication. 

Intellectual Property development of the subsequent specifications that use the Preliminary Specification as its base are done within a licensed environment by authorized user community members. The same applies to the software code and binaries produced. As the owner of the IP of the Preliminary Specification I am able to contract out its development through licensing in order to prepare derivative works. The application process for user community participation is here. Our user community license is the process of how this IP is aggregated, made available and the authorship and ownership of the work conducted by our user community members. This work by the user community member is not volunteer. It is paid, part-time work that provides the user community member with a source of long term income for the remainder of time that the software and their service provider organization are operational in the oil and gas industry. It is this work that defines the details of the software and their service providers services. It is therefore iterative, continuously evolving and able to be enhanced. The majority of the user community members income will be a result of their service provider organization, which the user community license grants them the exclusive right of a process domain of the developed ERP application. User community members have the power obtained in the user community vision to affect the changes to the specification and software to meet future requirements and enhancements as they require. They will work directly with their producer clients to ensure they are providing the appropriate software and services necessary to ensure profitable operations everywhere, always, and as we described on Thursday, for everyone. 

In order for the user community members to have this freedom and power demands that they have access to the entire Intellectual Property of these specifications, software etc. With payment for their time I am purchasing title to their Intellectual Property from them. This ensures that the entire specifications IP is kept whole and as one distinct and complete unit. When producers use these software and service providers they’ll have no need for any cross licensing or other requirements. That would not be the case if each user community member was to have maintained ownership of their individual contributions. An untenable situation. In turn the user community license grants access rights to this entire base of IP and enables user community members to prepare their derivative works. This is the method that has been designed to deal with the IP aspect of the administration and accounting of the new oil and gas industry in comparison to that described in the exploration and production areas. But there’s more. 

People, Ideas & Objects have been commercially licensed to manage this Intellectual Property on my behalf. I am the rightful owner of it as it stands today and will be throughout the initial development through to the successful commercial implementation of the software. I use the IP to raise the budget for the development of the software which includes the costs of the user community. Currently conducted through the Production Rights that provide the exclusive right to use the successfully implemented software and service providers. Producers will need to aggregate the appropriate volume of production rights in order to process their firms ERP needs. Production rights owners will be using the smart contract of the underlying blockchain technology to manage and maintain their rights and revenues without their day to day involvement. I have structured the budget in a way where the first payment made out of the budget is to me for the royalties and profits of the work I've done to date in the development of this IP. I receive payment up front and am not looking for anything to arise down the road. The user community license includes with it a grant of the entire IP of all of this work to be a) kept whole and b) collectively owned by the user community members themselves. The IP will be available to them to continue their work in the same manner as described above and they will be the net benefactors of the work they did from the beginning of their involvement with the associated ownership rights. This will be an incremental value in addition to their part time revenues in the user community and full time efforts in building their service provider organizations. If it’s not complicated enough for you then let's stick some spokes in the wheels.

User community member XYZ has been part of the community for six months and it is reasonable to assume one of three possibilities. They’re either in over their heads and can’t contribute, are looking for a lucrative free ride or are alternatively we could have a scenario where, if we didn’t structure the IP in this way, a user community member could come in and make a valuable contribution and, sit back and wait to cross-license and litigate as their value proposition. What I am suggesting is that in either of these, or other possible scenarios, the licensing and management of the IP in the structure of this user community ensures that the user community itself can manage who contributes, and if they’re not able, free riding or implementing a value proposition inconsistent with the overall objective, the user community, under the license provisions will have the means in which to terminate the individuals license. The right to cull the herd will be a method that the user community will be able to ensure that quality is achieved and obtained in each and every corner of the work they’re doing. Vetting is not always able to determine the best candidate. A successful implementation is necessary in order to earn the IP grant. This management will be self administered by the user community and I would imagine that the first years may see up to 25% of the community being culled each year. 

This makes membership in the user community a privilege and not a right. Those that contribute are compensated appropriately and will need to perform to ensure producers are able to rely on quality ERP systems. Members of the community themselves will be able to know reliably they will not have to tolerate the inappropriate behaviours and antics of those that haven’t fully participated. They’ll also not have to carry any “dead weight” with them. If you want to belong to a high performance community, these are the methods that have been used to establish other organizations' performances. Success must be obtained when the stakes are this high and the dependence is wholly upon this user community's performance. The mitigating strategy for the user community members is it’s part time participation. We are building upon the depth of industry knowledge necessary to ensure the full scope and scale of the application is conducted correctly and in innovative ways. There is an opportunity to determine if you qualify, can participate, if this arena is your calling where you're able to make a contribution and a difference. There are risks, and I have worked to ensure that none of these are incurred unnecessarily, but what doesn’t have any risk these days.

On the other hand we have no shortage of work to do. Much needs to be done in the next few years. The Preliminary Specification needs to be built. The engineering and geological explicit knowledge needs to be captured as Intellectual Property and developed. New oil and gas firms need to be formed, capitalized and organized. Assets need to be transferred to these new producers in innovative, strategic and tactical ways. In this process we’ll all be helping the current producers to travel faster down their chosen journey to clean energy by disposing of dirty oil. This transition to the Preliminary Specification is something that must be done to deal with the financial difficulties the industry is plagued with from the current administration. This also needs to be done as preparation for the future. And to learn from the experience of this transition as we’ll be faced repeatedly with situations that share this same scope and scale of change in the near future of this business. We’ll therefore be somewhat prepared and experienced in challenges of this nature. Please review our Production Rights to see how everyone can participate in making this new oil and gas industry happen. An industry where it will be less important who you know, but what you know and what you're capable of delivering, what the value proposition is that you’re offering?

Those interested in joining our user community are People, Ideas & Objects priority and focus. The Preliminary Specification, our user community and their service provider organizations provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations, everywhere and always. Setting the foundation for profitable North American energy independence, everywhere and always. In addition, our software organizes the Intellectual Property of the exploration and production processes owned by the engineers and geologists. Enabling them to monetize their IP for a new oil & gas industry to begin with a means to be dynamic, innovative and performance oriented. Providing a new investment opportunity for those who see a bright future in the industry. A place where their administrative, accounting, exploration and production can be handled for the 21st century. People, Ideas & Objects have joined GETTR and can be reached there. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here. 

Our Ground Floor Vision

 People, Ideas & Objects have painted a vision of how and what the Preliminary Specification, our user community and their service providers would structure the dynamic, innovative, accountable and profitable oil and gas producers to be. Recently in Organizational Constructs we noted how the Preliminary Specification uses five major structures to define and support the industry. These include the Joint Operating Committee, markets, Intellectual Property, specialization and the division of labor and the Information Technologies that are available today, such as the Internet. Expanding on these constructs to include the reorganization of the Intellectual Property of the earth science and engineering capacities and capabilities that are undocumented in the industry today. Offering a comprehensive organizational form which provides an ERP system to support exploration, production, administration and accounting. Setting out the gold rush opportunity for the industries engineers and geologists to document, publish and earn the copyright and therefore establish a foundation for their new applied sciences firm based on that Intellectual Property. In the process breaking down the foundation of the existing producers capacities and capabilities and setting up new ways in which the engineers and geologists will operate in the industry we’re rebuilding. Supported directly through the Preliminary Specifications Work Order system that captures their time and billing needs to manage the commercial aspects of their products and services. 

But there is so much more to what we’re doing, and what everyone involved in oil and gas could be doing. The primary industry of oil and gas directly affects many other businesses and industries that are critically important to the success of a profitable, energy independent North America. That is to ask the question, what business, or how are you employed today? Does it affect our objective of ensuring that all production in North America is produced profitably and always? And profitably from the point of view of recognizing all of the costs of exploration and production in a timely and accurate manner? That competes in the North American capital markets on a competitive basis? Then you will be interested in better understanding the overall vision of rebuilding the oil and gas industry based on your involvement in the markets that are forming, and need to form, to make these objectives real for the remainder of the time that we’re dependent on oil and gas. Those wishing to save the planet will have their own plans as they move on to their clean energy startups. Ground floor opportunities for everyone in energy! Just as The Constitution assures us that all men and women are created equal. This ground floor opportunity offers the same equal treatment today. However, unlike the Biden regime it does not suggest that equality of outcome is even possible anywhere or at any time in this or any galaxy that we’re aware of. 

The role of capital in a startup operation is massively diminished in the 21st century. Particularly when the acquisition of Intellectual Property is the foundation of a firm. Add to this the soon to be standard working from home method of operation cuts the overhead of what you're doing. The other aspect of all of this is you don’t have to technically do anything in the short term. That is your new venture can exist almost exclusively in your mind and SSD. The time spent in planning, thinking, or what I’ve listed as the competitive advantages of the service providers would also be applicable here. They include quality, specialization and the division of labour, automation via software, innovation, leadership, application of Artificial Intelligence, which all use the uniquely human attributes of issue identification and resolution, creativity, collaboration, research, ideas, design, negotiating, compromising, financing, reasoning and judgement to just start the list. These form the long term competitive advantage of these businesses built upon the foundation of the Intellectual Property being developed. 

I’ve mentioned this opportunity to some people and in some cases found an interesting response that I would caution people from taking. That is they think the opportunity is too advanced for them at this time. Or too advanced for them. Maybe they’re just being kind to me and not telling me what they really think! People shouldn’t be thinking this way. Everybody has a role and a place to fit in, somewhere. Don’t preclude yourselves from this opportunity without some serious thought and consideration first. Set aside your concerns of where you are today, and think more of where you'd like to be in a decade and three decades from now. The only thing that haunts you in old age are your regrets. (And it’s not that I’m completely there yet.) Don’t let the opportunities you didn’t fully explore become one of your regrets. 

To rebuild the foundation of the oil and gas industry on profitability is the only way that the primary, secondary and tertiary industries can develop and prosper. What has happened here in the past is, and should be seen as unacceptable, is nothing short of a dictatorship run by bureaucrats for their own self serving purposes. Which is the inherent motivation of all people to do well for themselves. And that is what this opportunity provides, the opportunity to build a substantial business operation. Yet, as a result of their failure, we see now the need for a profitable oil and gas industry is necessary to make everything else real. And if everyone is not focused and pointing in the same direction at that goal and objective of profitable energy independence, we’re wasting our time, our resources and other people’s money. It’s time someone did something and that demands action from every corner of these industries and people involved. And that is us.

A few quick tips to make the process easier and safer for you. Don’t be afraid to publish your IP as soon as you can generate it. I use Google’s blogger platform for a number of reasons. At the beginning denial-of-service attacks were common and could cause time and effort to be consumed on petty server related maintenance. I’ve done none of that for any reason for the past sixteen years. It’s free and has the ability for you to earn advertising though you won’t have a strong audience in the engineering or geological related discussion of oil and gas. This is not a large market. Don’t concern yourself with bureaucrats finding out what you're doing. They're not looking and are busy with other things. If they do find you the worst they can do is blacklist your site on their file wall which is shared across the industry. Just don’t post your picture right away. In other words don’t quit your day job. Writing is the process of generating the IP and the process never ends. You’ll always be building on the base of what you've done. 

The need to spend money doesn’t exist. That is unless it’s absolutely necessary. If the pennies can’t scream any louder, don’t spend anything. Remember we can stop the log from rolling down hill at great cost. And begin rolling it back up with great effort and cost. Only to have what we had that’s caused this damage. There are better ways to do things today. Let's use those methods instead. You can start today. 

I’m now going to head off the range, even further, for a few minutes to get a point across that might be a bit of a stretch for some people. However I’m willing to risk it in terms of relating where we might be in the greater scheme of things. Whatever you may think of the argument make sure you come back. The first paragraph is a quote from Winston Churchill, and they are followed by quotes of Professor Larry Arnn in his book “Churchill’s Trial, Winston Churchill and the Salvation of Free Government.”

Mankind has never been in this position before. Without having improved appreciably in virtue or enjoying wiser guidance, it has got into its hands for the first time the tools by which it can unfailingly accomplish its own extermination. That is the point in human destinies to which all the glories and toils of men have at last led them. They would do well to pause and ponder upon their new responsibilities. Death stands at attention, obedient, expectant, ready to serve, ready to shear away the peoples en masse; ready, if called on, to pulverize, without hope of repair, what is left of civilization. He awaits only the word of command. He awaits it from a frail, bewildered being, long his victim, now—for one occasion only—his Master.

Churchill raised the hope that science itself will lead to the amelioration of these dangers but was quick to discard this hope: “The hideousness of the Explosive era will continue; and to it will surely be added the gruesome complications of Poison and of Pestilence scientifically applied.” Mankind is progressing toward destruction. Only an improvement in certain virtues of man—especially the virtue of wisdom or of “wiser guidance”— stands in the way of his elimination.

Nuclear weapons were the subject of his last major speech in the House of Commons, which he gave on March 1, 1955, shortly after the announcement of the hydrogen bomb by the United States. The hydrogen bomb was much more powerful than the atomic weapons used against Japan, and Churchill thought the change in power important, a difference in degree that amounted to a difference in kind. It revolutionized “the entire foundation of human affairs” and placed mankind “in a situation both measureless and laden with doom.” He continued: “Major war of the future will differ, therefore, from anything we have known in the past in this one significant respect, that each side, at the outset, will suffer what it dreads the most, the loss of everything that it has ever known of.”

Here then is the new situation: men can now build societies in which large populations can enjoy security, comfort, freedom, and plenty. The tools that enable them to build such societies, unknown in the ancient world, can also be used to destroy those societies. This changes the relationship between construction and destruction, between building and tearing down, between saving for the future and living for the present. It is in principle a demoralizing fact if by morals we mean the virtues that lead to peace, harmony, and plenty in a modern society.

The analogy I want to draw here is; as our tools and organizational methods become more effective, the extent of our reach becomes more consequential. The fact is there are many calculations as to the number of man hours of equivalent labor contained in each barrel of oil. For the purposes of this calculation I’ll use 10,000 man hours or 1,250 man days of labor equivalent per barrel. With approximately 130 million boe / day consumed, just today’s consumption is the equivalent man days effort of a population of 162.5 billion people, or 722.2 million man years that we gain each day through the consumption of that energy. Dare I ask what are our moral and ethical virtues have allowed these bureaucrats to destroy what is so obviously now a mortal dependence? And, if oil and gas is as valuable as represented here, why have we taken it from future generations unnecessarily and unfairly by not at least producing it profitably? Profitable from the perspective of an accurate accounting of the costs of exploration and production. We owe them at least the assurance we didn’t waste any, and that we pass a viable industry on to them so they can manage theirs. There is a history recorded on this blog that began in December 2005 that details the deficiencies of these bureaucrats' administration and what their motivation was. Have they now earned the right to continue in that role, to divert oil and gas revenues for the continuation of their own personal benefit, and “pursue” their objective of “saving the planet” with clean energy after exposing us to such dire consequences? 

I see the same behaviors and attitudes that have been ever present with these bureaucrats. In a Reuters article entitled “Canada boosts U.S. natgas exports, drills more as global prices surge” we hear the whining and sniffling of producer CEO’s telling us what we’ve known for some time. 

However, a shortage of skilled crews to operate drilling rigs in Canada could limit how much gas output climbs, and some producers remain cautious that increased supply may rein in prices.

"How do we do more even if we wanted to do more? We're at a limit on the people that we have," said Darren Gee, Chief Executive of Peyto Exploration and Development Corp.

Taking a responsible approach to oil and gas. A responsible approach could be defined however they would want to. This chronic excuse, blaming and viable scapegoating has to stop at some point and there’s only one way that I can think that’s going to happen. Start rebuilding the industry on the basis of this overall vision that People, Ideas & Objects have presented here and build the Preliminary Specification. That way these officers and directors self absorbed navel gazing can be replaced by people who are focused on the one critical aspect of what’s required of everyone. Profitability in the primary industry of oil and gas to ensure that value is being built everywhere and always, for everyone. 

Please note there is a different procedure for our user communities involvement than what is defined here. I’ll address those differences in Monday’s post and support why those differences exist. 

On the other hand we have no shortage of work to do. Much needs to be done in the next few years. The Preliminary Specification needs to be built. The engineering and geological explicit knowledge needs to be captured as Intellectual Property and developed. New oil and gas firms need to be formed, capitalized and organized. Assets need to be transferred to these new producers in innovative, strategic and tactical ways. In this process we’ll all be helping the current producers to travel faster down their chosen journey to clean energy by disposing of dirty oil. This transition to the Preliminary Specification is something that must be done to deal with the financial difficulties the industry is plagued with from the current administration. This also needs to be done as preparation for the future. And to learn from the experience of this transition as we’ll be faced repeatedly with situations that share this same scope and scale of change in the near future of this business. We’ll therefore be somewhat prepared and experienced in challenges of this nature. Please review our Production Rights to see how everyone can participate in making this new oil and gas industry happen. An industry where it will be less important who you know, but what you know and what you're capable of delivering, what the value proposition is that you’re offering?

Those interested in joining our user community are People, Ideas & Objects priority and focus. The Preliminary Specification, our user community and their service provider organizations provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations, everywhere and always. Setting the foundation for profitable North American energy independence, everywhere and always. In addition, our software organizes the Intellectual Property of the exploration and production processes owned by the engineers and geologists. Enabling them to monetize their IP for a new oil & gas industry to begin with a means to be dynamic, innovative and performance oriented. Providing a new investment opportunity for those who see a bright future in the industry. A place where their administrative, accounting, exploration and production can be handled for the 21st century. People, Ideas & Objects have joined GETTR and can be reached there. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here.